Bid bust ticks Televisa
The surprise acquisition of Univision by a consortium including billionaire Haim Saban brought widespread relief at the Hispanic net — but left many wondering what move rejected suitor Televisa might make.
The $12.4 billion deal was unveiled officially around 2 a.m. Tuesday. After Wall Street digested the news, the stock closed up 2% to $34, after having fallen 4% last week during the bidding process.
Once the deal is completed, Saban is expected to be named chairman of the board of a revamped Univision. Saban Capital prexy-chief operating officer Adam Chesnoff also will likely be named to the board along with reps from the equity partners.
While a few analysts speculated Tuesday that disappointed bidder Televisa could end up joining the winning consortium, the irate Mexican media giant implied instead that it might sue Univision — or embark on its own venture Stateside.
Televisa apparently felt Univision’s rejection of its bid (at $35.75 a share) was due to personal differences between the top execs at the two companies.
What is clear is that the acquisition cements Saban’s role as a key player in global broadcast TV, with assets in Israel, Germany and now the U.S.
The deal, which includes the assumption of $1.4 billion in debt, has Saban contributing $250 million, significantly less than his four private equity partners, who will each put up $900 million.
Both Thomas H. Lee and Providence Equity are investors with Saban in German commercial powerhouse ProSieben as well as in Univision.
The widespread assumption inside Univision had been that Televisa would win the auction, meaning pinkslips for many staffers, including Univision prexy Ray Rodriguez, would follow.
“I think people are relieved,” said one Univision exec. “With Televisa, a lot of people knew they were going to be gone; now they’re not so sure.”
An embittered Televisa issued an aggressive statement Tuesday in which it implied that Univision had not negotiated in good faith and hinted it may try to block the deal, or make good on its threat to launch its own Spanish-language net in the U.S.
“Notwithstanding our repeated offers to discuss all aspects of our proposal including price, Univision and its advisers refused to enter into any discussions with us after we submitted our initial bid. Given this action by Univision’s board, Televisa has a number of alternatives it is considering,” the company said.
“Televisa will vigorously pursue its options to build its potential in the growing U.S. Hispanic marketplace,” the statement concluded.
The acquisition of Univision settles a drama within the company worthy of one of its seamier telenovelas.
Univision chairman-CEO A. Jerrold Perenchio had long wished to cash out his investment, but he was also feuding with the most likely buyer of the company, Televisa chairman Emilio Azcarraga Jean.
The acrimonious bidding process came to a head during Univision’s biggest TV programming event, the World Cup, and in the midst of its upfront sales period. The company was hoping to capitalize on ratings gains that put the network in fifth place in total viewers, but it’s still unclear how much of a distraction the auction has been.
At the same time, Televisa found itself struggling to keep its consortium together, losing first three equity partners and then its broadcast partner, Venezuela’s Venevision, before finally lodging a bid Friday with its two remaining partners, Bain Capital and Cascade Investments. (The defectors apparently thought the price was too rich and that Televisa was trying to call the shots.)
Unlike Televisa’s consortium, the Saban group — which includes Providence, Texas Pacific, Thomas H. Lee and Madison Dearborn — has no programming infrastructure or expertise in Spanish-language broadcasting.
A source close to Saban said the mogul, who made his name creating “Mighty Morphin Power Rangers,” sees no need for Univision to be “fixed but rather to grow and mature along with the Hispanic market it serves.”
“He’ll probably wring some savings out of the operation early on, and then start thinking about tweaks to the mix of imported shows (telenovelas from Televisa) and original programming,” said a source familiar with Saban’s thinking.
“If his other broadcast ventures are any indication, he won’t meddle on a day-to-day basis,” the source said.
That’s good news for Rodriguez and his management team, who were installed without consultation with Televisa, a move that caused Televisa chairman Azcarraga to quit the Univision board last year.
The auction process only widened the rift between Univision and Televisa, which supplies the bulk of Univision’s primetime telenovelas, including “La fea mas bella” and “Peregrina.”
Soon after Azcarraga left the board, Televisa sued Univision for material breach of its content deal. From Televisa’s initial reaction, it appears the Mexican broadcaster has no intention of making nice with Univision’s new owners.
Azcarraga told a group of MBA students in Mexico City recently that he wouldn’t negotiate with Saban if the latter won, implying Televisa won’t renegotiate the programming agreement with the new buyer, but rather continue to push in Los Angeles Superior Court to have it annulled.
Televisa’s content remains the linchpin of Univision’s immediate future; their current programming deal extends through 2017, though Internet rights revert back to Televisa later this year.
Originally Saban Capital was pitched by Televisa’s banking adviser at Allen & Co., Enrique Senor, to join the long-planned consortium led by the Mexican broadcaster. But when it became clear to Saban that Televisa wanted to retain control over management, programming and operational decisions, the independent-minded mogul decided to put together his own rival bid.
After the Saban group’s initial offer of $35.25 per share was rejected late last week as too low (and Televisa eventually scraped together a higher bid of $35.75) Saban and partners reconsidered over the weekend and communicated its higher offer of $36.25 on Sunday.
Deal is expected to close next spring.
(Elizabeth Guider in Hollywood and Michael O’Boyle in Mexico City contributed to this report.)